‘Cha-cha, infrastructure needed to sustain growth’
Amendments to the Constitution and improvement in infrastructure are needed for the Philippines to achieve a sustained growth of 7 percent or more in the coming years, according to a report by the advisory and research consultancy group Stratbase Research Institute (SRI).
In a 16-page report posted on its online newsletter Spark, SRI said while the country’s economic growth in the third quarter of 2013 was laudable, it is too early to offer congratulations.
“The country has yet to establish a sustained growth record. The pattern is more boom-and-bust and growth has never exceeded double-digits. Taking population growth into account will reduce the country’s per-capital growth rate even further,” professor Victor Andres C. Manhit, president of SRI, said in the report titled “Ready to Compete? An Assessment of Philippine Competitiveness, Trade and Foreign Direct Investment Regimes.”
The Philippines’ gross domestic product (GDP) grew 7.1 percent in the third quarter of 2012, second only to China’s 7.7-percent expansion. GDP grew 6.8 percent in the fourth quarter.
Manhit, however, said the country needs to improve its competitiveness against other Asian economies, if it is to sustain such high-growth level.
Foreign direct investments (FDIs) in the Philippines reached $1.1 billion in the first three quarters of 2012, up by 40 percent from $782 million a year ago. The figure, however, was miniscule compared to FDIs going to other Asian countries.
“Overall, the most problematic factors for doing business in the Philippines are corruption, inefficient government bureaucracy and inadequate supply of infrastructure,” he said.
He said the Philippines seemed mired in transition between stages of economic development. While it has a sophisticated financial market, stable macroeconomic environment, capacity to absorb new technology and a sizeable market, the country is stymied by weak institutions, an inefficient bureaucracy and inadequate infrastructure that together raise the cost of doing business and make the country a not-so-attractive destination.
Manhit, thus, cited the need to amend the 1987 Constitution to allow more foreign investments into the country.
He also stressed the importance of improving infrastructure. “Providing adequate physical infrastructure must be a continuing concern given the regular damage wrought by natural disasters. If these tasks are met, high-growth and economic prosperity for Filipinos will result as a matter of course,” he said.